A new year will bring new tax challenges for Hong Kong as the international tax landscape continues to evolve, and Hong Kong must determine how its territorial source principle of taxation can be maintained while responding to them.
Agreement on the new taxation rules to be introduced through the Organization for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 project were set out in a statement issued by the OECD in October. The statement sets out the additional agreed components of the Pillar One and Pillar Two rules and more importantly, a detailed implementation plan for both pillars with an aim of bringing Pillar One and Pillar Two into effect in 2023. In addition, the detailed model Global Anti-Base Erosion Proposal rules under Pillar Two were published on 20 December.
As well as working on implementing the BEPS 2.0 project, Hong Kong has found itself (along with Malaysia) added to the European Union’s watch list of non-cooperative jurisdictions for tax purposes in October. The E.U.’s decision is based on its review of Hong Kong’s offshore or territorial tax regime and its major concern is the non-taxation of foreign sourced passive income under the offshore regime, particularly in the form of interest or royalties where the income recipient has no substantial economic activity. Hong Kong has committed to making the necessary changes to the relevant tax legislation by the end of 2022, a move that may have an impact on some multinational companies and foreign enterprises in Hong Kong. Those changes will take effect on 1 January 2023.
About the webinar
The webinar “Latest developments on BEPS 2.0 and the E.U. grey list – What do they mean for Hong Kong businesses?” will take place on 20 January at 6:00 p.m., and aims to explore the implications of these two global tax developments on businesses and their financing structures. It will be chaired by the Convenor, Taxation Faculty’s Budget Proposals 2022/23 Sub-committee, Eugene Yeung CPA, Partner, Business Tax Advisory at KPMG China. He will lead the two speakers, Patrick Cheung, Partner, Global Transfer Pricing, Hong Kong, and Anita Tsang CPA, Director, Tax Policy and Knowledge Management, at KPMG China in their discussions on the international developments and how they may affect Hong Kong.
Their discussions will highlight the latest developments of the BEPS 2.0 project, covering both Pillars One and Two, introduce the background leading to the inclusion of Hong Kong on the E.U.’s grey list and the E.U.’s concerns, discuss the potential changes to the Hong Kong tax system driven by these developments, with reference to the approaches taken by Singapore and Malaysia, and discuss how businesses in Hong Kong may be impacted by all these changes and what actions are required for affected businesses.
About the speaker
The Hong Kong Institute of CPAs’ Taxation Faculty brings together the tax activities and programmes run by the Institute: primarily the technical, advocacy and liaison work as well as member services such as seminars, networking events, and an e-newsletter.
The Taxation Faculty helps raise the profile of the taxation profession in Hong Kong and provides a stronger voice for members working in this field. It also offers a platform for the further development of high-quality tax services under the Institute. The faculty also lends support to other Institute initiatives, such as the professional diplomas in taxation.
Members and non-members are welcome to join the Taxation Faculty and attend seminars at a discounted rate. More information can be found on the Institute’s website.
The Hong Kong Institute of CPAs’ Taxation Faculty helps raise the profile of the taxation profession in Hong Kong and provides a stronger voice for members working in this field and also offers a platform for the further development of high-quality tax services. Members and non-members are welcome to join the Taxation Faculty.